Costs associated with two alternatives, code-named Q and R, being considered by Corniel Corporation are listed below:
|
Alternative Q |
Alternative R |
| Supplies costs |
$ |
77,000 |
$ |
68,000 |
| Power costs |
$ |
49,000 |
$ |
49,000 |
| Inspection costs |
$ |
29,000 |
$ |
44,000 |
| Assembly costs |
$ |
42,000 |
$ |
31,000 |
|
| a. |
Which costs are relevant and which are not relevant in the choice between these two alternatives?
|
|
|
| Supplies costs |
|
| Power costs |
|
| Inspection costs |
|
| Assembly costs |
|
|
| b. |
What is the differential cost of Alternative R over Alternative Q?
|
Part 5--------------------------------------------------
Silmon Corporation makes a product with the following standard costs:
| Inputs |
Standard Quantity
or Hours |
Standard Price
or Rate |
| Direct materials |
4.3 |
grams |
$ |
7.00 |
per gram |
| Direct labor |
0.5 |
hours |
$ |
14.00 |
per hour |
| Variable overhead |
0.5 |
hours |
$ |
4.00 |
per hour |
|
In June the company produced 4,800 units using 21,890 grams of the direct material and 2,520 direct labor-hours. During the month the company purchased 24,700 grams of the direct material at a price of $6.80 per gram. If materials used are more than the materials purchased, the additional amount is taken from inventory.
The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.